Crypto hardware wallet maker Ledger said Friday it is investigating reports of stolen funds linked to devices sold through a reseller in Southeast Asia, as a suspected $86 million heist threatens to add to the industry's mounting losses from exploits this year.

The company is looking into reports that more than $86 million in cryptocurrency may have been stolen from hundreds of wallets linked to devices sold by CryptoBilis, a Southeast Asian reseller, though the losses and the connection have not been independently verified.

Ledger has asked CryptoBilis to halt sales and shipments, and advised recent buyers not to set up their devices. Customers who have already activated wallets should consider transferring their assets to a new device with a newly generated recovery phrase, the company said. A supply-chain attack involving tampered devices could be one possible explanation, but the cause, number of affected users and the total losses remain unconfirmed.

What investigators and Ledger have reported

Pseudonymous blockchain investigator Specter said on X that more than $86 million in crypto may have been stolen from hundreds of wallets. There has been no independent confirmation of the amount of user assets affected.

Specter said they traced suspected theft addresses across Bitcoin, Ethereum and Tron after seeing reports from Ledger users on X and Reddit. It remains unclear whether the incidents are connected or what caused the losses.

Ledger acknowledged in a post on X the reports of missing funds from customers who purchased devices through CryptoBilis, a reseller in Southeast Asia, but did not confirm the reported loss amount or identify the cause.

As a precaution, the company said it asked CryptoBilis to pause all sales and shipments while its investigation continues. Ledger advised customers who purchased devices from the reseller within the past 90 days not to begin setting them up. Those who have already activated their wallets should consider moving their assets to a new Ledger device with a newly generated recovery phrase, the company said.

A possible supply-chain attack

One possible explanation is a supply-chain attack, in which hardware wallets are tampered with before reaching customers. For example, an attacker could supply a device with a recovery phrase they already know, allowing them to access funds deposited into the wallet at a later date. A recovery phrase is the sequence of words that backs up a hardware wallet and controls access to its funds, and it is designed to be generated on the device itself so that no one else knows it.

Such a scenario would differ from a breach of Ledger's own systems. However, there is no confirmation that device tampering or pre-generated recovery phrases caused the reported losses, and no confirmed evidence that Ledger's own systems or wallet technology were compromised.

The incident remains under investigation, and it is unclear how many users were affected, whether the reported thefts are connected or how much cryptocurrency was lost. Ledger said it would provide updates as the investigation progresses.

A rough year for crypto security

The potential theft may add to an already rough year for crypto security. Last month, crypto exchange Bitget suffered an exploit that resulted in over $350 million in stolen assets. Other major incidents included Liquid Network at about $320 million, Drift at $295 million and Kelp at $293 million, according to DefiLlama data. If confirmed, the suspected Ledger-related losses would be smaller than each of those exploits, but the episode is notable for the segment involved: hardware wallets, the offline devices many holders use precisely to keep their funds off exchanges and other online platforms.

About Ledger

Founded in 2014 and based in Paris, Ledger is a major maker of hardware wallets, devices that keep the private keys used to access cryptocurrency offline. The company says it has sold more than 7 million devices worldwide, and its products are widely used by investors seeking to protect their crypto without relying on exchanges.

That makes any potential security issue involving its products significant for the broader crypto market. In this case, however, the investigation concerns devices sold through a third-party reseller rather than Ledger's own channels. Devices bought directly from the manufacturer go from production straight to the customer, while resold units pass through intermediaries before reaching buyers — a difference at the center of the current investigation.

UPDATE (Oct. 9, 14:58 UTC): Adds further context about Ledger.

Source: CoinDesk